Former Liberty Reserve manager sentenced to 3 years in prison

NEW YORK — A Former Liberty Reserve manager was sentenced Monday to three years in prison for conspiring to operate an unlicensed money transmitting business in connection with his work for Liberty Reserve, a company that operated one of the world’s most widely used digital currency services. This sentencing follows an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the U.S. Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Attorney's Office for the Southern District of New York.

Maxim Chukharez, 29, of Costa Rica, was primarily responsible for maintaining Liberty Reserve’s technological infrastructure and for implementing systems designed to create the false appearance that Liberty Reserve had an effective anti-money laundering program.  Chukharez pleaded guilty in September 2014 before U.S. District Judge Denise L. Cote, who also imposed the sentence.

Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.”  Liberty Reserve was created, structured, and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes.  It emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity.  Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals around the world to conduct anonymous and untraceable financial transactions. 

Before the U.S. government shut it down in May 2013, Liberty Reserve had more than five million user accounts worldwide, including more than 600,000 accounts associated with users in the United States, and processed tens of millions of transactions through its system, totaling more than $16 billion in funds.  These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking, and other crimes. 

Chukharez began doing work for Liberty Reserve in 2009, and was hired as an employee in January 2010.  At first, Chukharez reported directly to Mark Marmilev, Liberty Reserve’s chief technology officer.  As time went on, Chukharez took on greater responsibility, including the creation and implementation of a system designed to hide information about Liberty Reserve’s users and the sources of its business from the company’s Costa Rican regulatory agency.  By design, the system provided mostly “fake” statistics about Liberty Reserve’s business to the agency, in order to give the appearance that Liberty Reserve had an effective anti-money laundering program.  Beginning in January 2012, Chukharez took over many of Marmilev’s responsibilities in the day-to-day management of Liberty Reserve’s technical operations, including the maintenance and operation of its website.  Chukharev worked for Liberty Reserve for years despite knowing that the business was not licensed as a money transmitting business under U.S. law.  The fact that Liberty Reserve had not registered as a money transmitting business under U.S. law was a vital component of its success as a system used to launder funds derived from or intended to promote criminal activity.